What is Production Concept in an Organization?


By: Site Engineer, Staff

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Production is concerned with the creation of goods and services desired by consumers. The process of creation of goods and services may consist of simple operation, and of scale that can be carried out by a single individual without any mechanical aids. It may also be complex, requiring a series of operations which are carried out only by a group of individuals, with the aid of machines and other equipment. In the former case, production can take place inside the home or any convenient location, while in the latter case, production is necessary for a special location known as a factory.

The term ‘production’ is also applied to the provision of services such as in hospitals, banks, insurance companies, and government ministries and agencies. However, the production function is often associated with the factor, simply because it originated and developed in the factory or manufacturing situation.

In this article, production is discussed in the context of manufacturing systems. However, most of the concepts introduced are easily applicable to service organizations.

Production is concerned with two broad sets of activities.

The first set consists of activities and decisions which are usually infrequent, but the impact of which is usually difficult to change. Such activities include the conception and design of the product, the design of the sequence of activities necessary to create the product, as well as the selection and acquisition of the needed equipment, the location of the production facility, arrangement of machines and equipment on the factory floor and material handling systems.

The second set of activities consists of those that can be altered in the short run. They include the procurement of labor and raw materials, warehousing of both raw materials and finished goods, planning and controlling the production system in order to meet delivery dates at minimum cost, and maintenance of production facilities.

Types of Production

There are three basic types of production.

1. Job Production

This is a situation where facilities and equipment are designed and arranged to fabricate, assemble or create a product according to specification, usually given by a customer. This type of production may also be called a project. The construction of a building, bridge, ship or other special purpose product is done by job production.

In job production, the volume of output is generally low, but the unit cost is often high. Job production demands a lot of flexibility. It requires various types of general purpose machines and equipment, and a highly skilled workforce, capable of handling a wide range of machines and equipment.

2. Intermittent or Batch Production

In this form of production, limited quantities of similar products are made at a time. For instance, about 20,000 frying pans of similar size, shape, and quality are made, after which a batch of 100,000 cooking pots are also made, using with the same machines and equipment. The production facilities are such that they can be used to manufacture a wide variety of products. This flexibility is achieved by adjusting or retooling machines to suit the particular design desired.

It is not necessary to complete the production of one batch before another can be started. As soon as work on a batch is completed on a machine, the semi-finished products are transported to another machine for further processing. Meanwhile, the first machine can be used to process a new batch. Movement of raw materials between machines is intermittent, that is, the movement of raw materials assumes a stop-and-go pattern. In a laundry business, for example, a washing machine can be used to wash a batch of cotton fabrics. At the end of the washing cycle, the materials are removed and conveyed to a drying machine, while the washing machine could now be used to wash synthetic materials after necessary adjustment of the temperature control. Other examples of intermittent production may be found in furniture and tailoring factories.

3. Continuous (or Flow) Production

This is continuous production, products and equipment are standardized, and raw materials are processed from one stage to the next on a continuous basis. As one stage of the production process is completed, the work-in-process is mechanically moved to the next page. Processing is not allowed to stop at any stage unless the entire plant is shut down. The volume of production is usually large and production may last as long as possible.

One of the examples of continuous production is the assembly-line, where components and parts are fostered or joined to the product, as it moves from one operator to another. In the assembly of motor cars, one operator may install only carburetors, while another installs only radiators, and so on. Petroleum refining, cement production, and palms oil milling are other examples of continuous production.

This type of production requires a continuous supply of raw materials and energy, effective monitoring of the entire production process and effective supervision.

When control and material handling between operations are automatically done in continuous production, the process is said to be automated. The entire production process is monitored by machines which transmit information on any deviation from expected performance to a control device. This device automatically regulates the machines to ensure that the output is produced to specification. The method by which raw materials are converted to the form in which they are needed is called the production process.

Production may also be classified according to the process involved as follows:

  • Analytic Production: Production may involve the breaking down of raw materials to make desired products. Crude oil may be broken down into diesel oil, super petrol, kerosene, lubrication oil, etc. This process of production is called analytic production.
  • Synthetic Protection: Raw materials may be combined to form a new product. For example, a pencil is made by combining lead, wood, and paints. This process of production is known as synthetic production.
  • Extractive Production: When production involves the drawing of raw materials from the land, sea or air, it is said to be extractive. Various minerals, such as crude oil, tin, and columbite, are obtained by the process of extraction from the earth. In the same way, oxygen and carbon dioxide are extracted from the air, while fish is extracted from the sea.
  • Fabrication: Manufactured materials may be used as raw materials in other production processes. Fabrication is the process of converting by means of cutting, shaping, or machining a manufactured raw material into other desired products. Sheet metal manufactured in steel mills may be fabricated into buckets and corrugated iron sheets, while wood may be used to manufacture chairs and tables.

Standard and Custom Manufacture

Production may also be classified according to the type of manufacturing operation. A company may design and manufacture a product according to its own specifications, for sale to customers. In such a situation, the product is said to be standardized, in the sense that one product is basically the same as the other. The parts of the products are also standardized parts which fit particular brands of cars irrespective of model. Where the parts are made under license by another manufacturer, the original design specifications are usually adhered to.

On the other hand, a company may manufacture a product according to the specifications provided by the customer. This is called custom manufacture.

Custom manufactured goods are usually unique to the customer. However, special features can be added to a standard manufactured product, to meet the special needs of a customer. Due to the unique nature of custom-made goods, they are usually expensive. It is also difficult to replace the special features of the product when it is damaged.

Large wholesalers or retailers may order custom-made products from a manufacturer. In such cases, the products carry the name of the design owner. Some cars are custom-made to fit the type of climate and roads in a particular country. Such cars are manufactured based on current demands for that those brand(s) of cars in a particular country.

A company which specializes in standard products may also combine custom-made goods. However, some manufacturers produce only according to the order received from existing customers. Such type of product is made to order, whereas the standard manufacturer produces to stock.

Factory Location

This is the siting of a factory in a particular place. It has important implications for both short-run and long-run cost of production and efficiency. While one location may have abundant and cheap labor supply, it may also involve the heavy expenditure on the provision of infrastructural facilities such as roads, telephone, an extension of electricity, etc. Another location which has these facilities may be far from the sources of raw materials and involve huge freight cost to the factory location.

Therefore, the effort is made to balance cost factors and minimize total long-run costs. The major considerations in factory location are:

  • Process Input: Factories tend to be located at the source of process inputs such as raw materials, labor, energy, etc. Where raw materials are bulky and expensive to transport, factories that utilize such raw materials tend to be located at their source. Similarly, factories are located in areas noted for high labor productivity and low training costs. Example of locations dictated by raw materials is cement factories, oil mills, iron, and steel mills and wood factories.
  • Process Output: Location may be dictated by the market especially among factories whose production processes are synthetic (assembly). The nature of the finished product may be such that it is more convenient and cheaper to transport the raw materials for processing at locations close to the market. The location of furniture factories and bottling plants is mostly determined by the market.
  • Process Requirements: The production of certain items may require special conditions. The process may require certain climatic or geographical conditions. It may also require the availability of certain services provided by other industries, such as banks insurance companies. Airports, for example, are located outside city centers and rubber processing plants are located by the riverside.
  • Personal Preference: The preferences of the entrepreneur or chief executive determine the location of the plant.
  • Tax and Legal Factors: Tax and legal requirements peculiar to a place are usually major considerations in the location of a plant. Factories may be located in areas where taxation is low and the legal requirements for the formation and operation of factories are not stringent.
  • Site Availability: Even though other factors indicate the suitability of an area for the location of a plant, the site may not be physically available. Thus, the availability of the site and adequate room for future expansion also determine the location of a plant.

Plant Layout

Plant layout is the arrangement of production facilities in the factory, to assure a free flow of workforce and materials between operations, and the achievement of total production efficiency. In plant layout, space must be provided for workplaces, storage, machines, paths between operations and auxiliary services such as tool rooms and maintenance shops, cafeteria and medical facilities. Provision must also be made for equipment needed to transport materials between operations, receiving of materials and dispatching of finished products.

The layout of a plant is never permanent. Circumstances change, as new products and technology are introduced, the layout of the plant is continuously altered to adapt to the new situation. Plant layout should, therefore, be capable of easy modification.

There are two types of plant layout: product layout and process layout.

  • Product Layout: This is also called a line layout. Product or line layout is the arrangement of machines and equipment according to the sequence in which they are needed in production. Assume that the manufacturer of a product requires operations in the order of A, B, C. Product layout is the arrangement of machines such that those required for operation A come before those required for B and C. Product layout is useful for the assembly of products. It is used mostly in situations where products are standardized and demand is fairly stable.
  • Process Layout: In process or functional layout, machines of the same functional types are grouped together. Thus cutting, milling and stamping machines are grouped separately. Process layout is used mostly in intermittent and job production, where there is a need for maximum flexibility.

Management of the Production Function

This involves decision-making on the series of activities and operations necessary to create goods and services which fulfill the need of customers at a satisfactory cost. In conduction with the marketing function, such goods and services must meet defined criteria of quality, cost, form and time. This means that goods and services produced by the production department must have the shapes, sizes, colors, and quality desired by customers. They must also be produced to meet the demand schedule of customers.

Production Control

Production control, in essence, is the function of management which plans, directs, and controls the material supply and process activities of an enterprise, so that specified products are produced by specified methods, to meet an approved sales programme; these activities being carried out in such a manner that the labor, plant, and capital available are used to the best advantage.

In production, it is important for management to formulate policies regarding the efficient and effective utilization of labor, material, and equipment, in order to achieve desired results. Production control is solely a managerial function. Material resources must be controlled by management, and employees work performance must be monitored to conform to a specified level of performance.

From the definition above, production control concerns four major steps:

1. Production Planning

The production or output of an item involves several stages. These stages must be planned efficiently to enable the organization to achieve production goals. The production goal of a company may be defined numerically, in terms of the number of items to be produced in a given period of time – hourly, daily, weekly or quarterly. Production planning, therefore, involves:

  • Factory planning/programming;
  • Dispatching; and
  • Ordering

These three levels of planning production are interlocking, in that tone process leads to the other. This means that factory planning must be done with due consideration for process or operational planning.

Factory Planning

This is the first task of producers. In factory planning, the manufacturers are concerned mainly with:

  1. Type of machines needed for production;
  2. Workspace required between one production sequence and another; that is, space requirements between departments,
  3. Tool needed by workmen.

Factory planning is done either for the short-term needs of the organization or for long-term needs. Short-Term factory planning may be for a period of one year or less. Such factory planning is intended to meet the immediate or short-term future needs of the manufacturer. For manufacturers who are involved in yearly retooling to enable them to introduce new models of products, factory planning is done in the short-term period. Also, factory planning can be for long-term periods, ranging from one to five years. Several factors are considered in the longer-term planning, such as present and potential demand, life-span of equipment, or capacity of production when the plant or factory is fully operational.

Ordering Planning

Ordering is the process of requisitioning materials that will be needed in production during a period of time. Planning for the ordering of material involves forecasting in advance what quantity of materials, parts, and labor for the production of items will be needed, either in the short-term, intermediate or long-term. As order scheduled for the short-term range could cover three months, while planned ordering for the supply of material or parts that will be needed in about six months or more falls within the intermediate ordering range; and ordering schedule covering over twelve months could be termed the long-term range.

In planning the ordering process, several factors are considered.

These are:

  1. The production programme of the organization;
  2. Product specification; and
  3. Production planning the operational layout.

(a)        Production Programme of the Organization

This refers to the number of products which is scheduled for production in a given period of time. In planning the ordering schedule, the organization must specify the number of products to be manufactured. The quantity to be manufactured depends on forecast demand for the period. If the organization manufactures more than one product, it is necessary to forecast the quantity of each product that will be demanded by consumers.

The demand for certain products may be seasonal. For example, the demand for Christmas cards is mainly during the months of October-December. Given a forecast for a certain period, it becomes necessary to determine the production rate and the size of the workforce, in order to minimize total costs. The determination of the production programme not only ensures that delivery schedules are met, but it also enables the production manager to schedule the purchase of raw materials, work overtime where necessary and utilize requirement adequately.

(b)       Production Specification

This is concerned with a determination of the number of parts that will be needed to complete the production of a unit of output. It is necessary to give each of the parts an identification number, a name or a symbol. Product specification deals with the identification of the features of a particular product.

Two companies may be involved in the manufacture of similar products which are sold in the same market. The only significant difference between the products may be the features of the product.

Product specification includes:

  1. Information about product maintenance for consumers;
  2. Parts’ numbers;
  • Assembly instructions

(c)        Production Planning Operational Layout

This involves a determination of the source of material and the section of the company where the material will be utilized in the production process. The manager in the production division also plays a major part in the ordering planning, by providing the purchasing department the necessary information to enable them place orders and to determine the quality of material needed in production.

Dispatching or Routine

Dispatching is the process of assigning jobs to the workmen or machine operatives, whose responsibility it is to produce the quantity specified in the dispatch order. The job of the dispatcher is to give information concerning the products to be manufactured, and the type of materials to be utilized in the production process. The dispatcher issues job cards to operatives, based on the quantity of output needed to satisfy customer’s orders. The dispatcher who is a specialist in dispatching is responsible for completing and keeping job cards.

The information on job cards helps machine setters to determine the special tools to be mounted on machines. Job cards help the setters to determine how much time will be taken to run a job, and to reset machines. In automobile manufacturing, where retooling is periodical, the dispatcher also issues job cards giving instructions as to when retooling should start for new brands of automobile products, and when production should start.

The dispatcher is also involved in issuing instructions on the need for materials at each work center. The storeroom is asked to supply a given quantity of material to the work centers, to enable them to complete production as indicated on the job card.

The main purposes of dispatching are to:

  • Control the issue of material from the storeroom;
  • Make sure that material requested is for production of specific items;
  • Control against material wastage;
  • Make sure that the job process is orderly;
  • Make sure that records of jobs and instructions on what items to produce are adequately filed.

Stock Control

It can be said that departing or routing is concerned mainly with three facets of production control:

(a)        Sequence Planning

This is concerned with planning in to advance the sequence of operations to be adopted in production. The question of what comes first in the production process is answered.

(b)       Process Planning

This depicts processes or stages of production necessary in the production of output, and this must be worked out in advance before setting up the machine for production.

(c)        Operation Planning

This is the assignment of operational responsibilities to departments (managers). In this process, several questions must be answered. Some of these are:

  • Which department will produce what, and what are the quantities to be produced?
  • Who are the lead men to handle production in assembly?
  • How long will the operation last and for how many hours must each machine be run in a day?
  • What is the maintenance schedule, to make sure machines work efficiently and uninterruptedly?


This is the arrangement of production activities in sequential order. It describes the products to be manufactured and the department responsible for the operation. Scheduling contains information prescribing when and where an operation is to take place. In other words, it provides detailed information of product, time or duration of production, units to be produced, and so forth.

Scheduling records may indicate the quantity of output which must come out of the production lines each day, week or month. Each production department is aware of the schedule of work assigned to it. Production schedules also help the production department to determine when a retooling is necessary, or when machine resetting is to begin, and when new item production is expected to start.

Schedule planning in a large enterprise is a complicated process, in that the schedule planners plan in accordance with materials required in production. Materials necessary for production must be available when the manufacturing operation of a particular product is scheduled to start.

The work scheduler must be in constant touch with the production division, purchasing, division, material storage unit and ordering unit. The responsibilities of these units are complementary, and as such, each of the departments must work together in order to achieve the production goal of the enterprise.

Usually, when scheduling is discussed, loading is often dealt with. Loading refers to the assignment of work to be done on a departmental basis. In reality, there is no difference between loading and scheduling, since both terminologies refer to the assignment of work to the department which is to do it.

Load Ahead Schedule

This indicates the workload to be performed by each department within a given period of time. From time to time, either on a daily or weekly basis, the workloads of the departments are adjusted to reflect the work that has to be performed to complete the unit of items to be produced. If a production unit is loaded to produce 50,000 screws of one type of nuts before resetting the machines, the division is monitored weekly to determine the number of units manufactured. At the end a number of units manufactured is subtracted from the total units to be produced. The purpose of this is to ensure that the production process is efficient and to avoid overloading. Load schedules also help management to control production and to decide on when to reset machines.

Quality Control

Every manufacturing organization establishes the quality of its product. The quality standards are established in such a way as to ensure that the quality of its products compares favorably with those of its competitors.

In order to ensure that there is no variation in the quality of its products, a product inspection unit is established to carry out quality inspection of the company’s output or products. The unit is usually under the works manager. The main responsibility of the unit is to objectively determine the standards of the products and to reject those products which fail to meet the established standards. The rejected products are known as irregular products, which may be destroyed or sold, without the company’s name or trademark, to outlets which deal in such products, at give-away prices.

Equipment for Production

The word equipment in this context refers to the machinery and other hardware required in the process of production. Every country has several regulations and measures to help indigenous production efforts. The popular term, transfer of technology, refers to efforts to acquire and own the capacity for production of goods and services. This means that the only way a country can develop production capacity is by transfer of technology through the importation of machinery, manpower to operationalize the machinery and materials needed for production.

Manufacturing machines have changed due to technology changes and changes in consumer taste, relating to quality and durability. As a result, producers of equipment invent new machines or change the features of existing machines to allow resetting and retooling, in order to meet the appropriate product design needs of the manufacturer.

Some manufacturers design their own equipment with special features and specifications, to meet their need, and to improve the quality of their products. In developing countries, this is not widely practiced, since machinery producers are far away in Europe and America. Most developing countries manufacturers buy standard equipment, which is based on the equipment manufacturers’ own specifications and designs.

Problems of Production

There are several problems connected with manufacturing in developing countries. Some of these are highlighted below.

1. Importation of Equipment and Material

Since most equipment are imported from overseas, it is difficult for the local manufacturers to request for special designs which will suit that might meet the manufacturing conditions in Africa, since the market of such equipment is restricted to one or a few industries. As a result, African manufacturers have to adapt their own techniques to suit the machines. The end result is that African manufacturers have difficulty in manufacturing products to reflect their countries’ conditions.

The manufactures end up turning out identical products which are also manufactured elsewhere in Europe or America. The result is that products made in Africa are sold side-by-side with identical ones imported from overseas.

Because of the importation of machines and materials for production, delays, and company idle manufacturing time, the cost of the locally manufactured good becomes higher than that for imported goods. Consequently, producers have a hard time remaining in business.

2. Lack of Efficient Manpower

One of the serious problems of manufacturing in Africa is the lack of skilled manpower to operate and maintain production equipment. In order to ensure that plants operate efficiently, and to maintain effective production schedule, skilled manpower is imported from abroad at a high cost. Most manufacturing companies have expatriates as technical advisers or production managers. All these add to the cost of production in Africa.

3. Import Restriction

Economic conditions have a great impact on manufactures or producers in this country. Furthermore, government laws and regulations tend to limit business activities. Since most manufacturing companies depend on foreign sources of raw materials, the restriction imposed by the government will tend to limit the ability of manufacturers to import needed raw materials.

Maintenance of Production Facility

In the African industrial sector, one of the greatest problems confronting producers is the maintenance of plant and equipment. The problems of maintenance of equipment emanate from the reality that most of the production equipment used in this country are manufactured in other countries. Before discussing these problems, let us understand the basic elements of maintenance.

Maintenance involves the repair and renovation of plants, repair of equipment in order to keep them in a satisfactory operating condition. In order to meet the production target, equipment must be kept in good operating condition. A good maintenance programme takes into consideration two forms of plant and equipment maintenance.

(a) Preventive Maintenance

Every equipment manufacturer specifies or recommends a schedule for servicing the equipment. For example, some equipment may require periodic shut down to allow the maintenance crew to service them. Periodic service requirement may be fixed at as say, every three months. Such periodic servicing is known as preventive maintenance. Parts are replaced, adjusted or repaired before the machine breaks down.

Preventive maintenance is important and ensures efficient production. Once machines break down, it takes a much longer time to get the spare parts, which invariably have to be imported with the maintenance expert, to carry out the necessary repair. Preventive maintenance is a routine service which is less complicated and easy to effect.

(b) Curative or Corrective Maintenance

This is concerned with effective repairs after machines or equipment have broken down. In curative repair, the parts needed and the experts to effect repairs may come from overseas countries. This is more costly than preventive repair in terms of man-hours, or labor time, output and management time. Regular preventive servicing tends to minimize curative maintenance.


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